3.1 Checking Accounts

3.1 Checking Accounts

Fill in your notes as you go through this Quizizz.

Definitions

• Checking Account: The "main" account where you money sits at the bank - checking accounts are very volatile as the money goes in and out quickly so banks generally don’t pay interest.

• Check – a bank issued paper agreement to pay someone, which you fill out and give to people. Unless you never write a check in your life

• Electronic Funds Transfer (EFT) – a transfer of ‘money’ where digits just move directly from one account to another. Fast, efficient, and more common than ever.

• Payee – the person the money goes TO. The payor is the person who gives the money

Definitions

• Check clearing – when a check is given, it takes time to process and ‘clears’ when the bank gets it and EFT’s the money to the other bank or gives the $ to the person.

• Deposit Slip – the thing you fill out to deposit cash into your account. Shows all the types of things in the deposit (checks, cash, change…)

• Direct Deposit – a type of EFT that puts your paycheck (usually) directly in your bank account. No getting an actual check and taking or sending it to the bank.

• Hold – funds can be “held” in order to ensure that a debit or scheduled transaction will clear when the time comes.

Definitions

• Insufficient Funds (INSF) – When you write a check or run a debit transaction and don’t have the money to cover it, it may be rejected by the bank for insufficient funds. Usually, this adds a fee to your account.

• Overdraft Protection – an inline loan account that covers checks (with interest) when you don’t have enough money in the account. Usually limited, and may be expensive.

• Maintenance Fee – what the bank charges you to keep your account open.

Definitions

• Interest – on a loan, interest is charged to motivate someone to make the loan. Usually annual, but the higher it is the worse it is for the borrower.

• Single account – an account with only one person on it (and may be limited to only 1)

• Joint account – an account with two or more people – all of whom may write checks, take money out, and do “stuff” with the account

• Check Register – paper thing that you track your checks in. Really…

Definitions

• Debits – money OUT of your account (debit cards are designed to let you easily spend)

• Credits – money INTO your account (credit cards are NOT the same…)

Example 1

Jackie deposited a $865.98 paycheck, a $623 stock dividend check, a $60 rebate check, and $130 cash into her checking account. Her original account balance was $278.91. Assuming the checks clear, how much was in her account after the deposit was made?

Deposit means she added money in to her account.

865.98 + 623 + 60 + 130 + 2789.91 = $4468.89

Example 2

Gary and Ann have a joint checking account. Their balance at the beginning of October was $9,145.87. During the month they made deposits totaling $2,783.71, wrote checks totaling $4,871.90, paid a maintenance fee of $12, and earned $11.15 in interest on the account. What was the balance at the end of the month?

9145.87 + 2783.71 - 4871.90 - 12 + 11.15 = $7056.83

Example 4

Allison currently has a balance of $2,300 in her checking account. She deposits $425.33 paycheck, a $20 rebate check, and a personal check for $550 into her checking account. She wants to receive $200 in cash. Fill out a deposit slip representing her transactions. What is Allison’s new balance?

Add her checks and subtract her cash to determine the net deposit.

Her current balance is

2300 + 795.33 = 3095.33

Fill in the Blanks

Example 1

Nick has a checking account with the Park Slope Savings Bank. For each transaction, Nick enters the necessary information: check number, date, type of transaction, and amount. He uses E to indicate an electronic transaction. Determine the balance in his account after the Star Cable Co. check is written.

Subtract Payments

Add Deposits

Example 3 Cont.

• Beginning balance on 10/29 is $237.47

• You write check 115 on 10/29 for $18.00 to Fox High School

• You deposit a paycheck for $162.75 on 10/30

• On 11/5, you use the ATM to get $20 for snacks at a sporting event

• Your credit card bill is due on 11/10, so on 11/7 you write check 116 to Credit USA for $51.16

Example 2

• Your sister repays you $45 on 11/10 and you deposit it

• You withdraw $20 from the ATM to buy flowers on 11/12

• You deposit a late birthday check for $35 on 11/17

Check your Register

Check your register for example 3

Overdraft Fees - Example 4

Ridgewood Savings Bank charges $27 per check overdraft protection fee. On July 8, Nancy had $1,400 in her account. Over the next four days, the following checks arrived for payment at her bank: July 9, $380.15; July 10, $670 and $195.67; July 11, $180; and July 12, $87.60. How much will she pay in overdraft protection fees? How much will she owe the bank after July 12?

Example 4

• 1400 - 380.15 = 730

• 730 - 670 = 60

• 60 - 195.67 = -135.67

• OVERDRAFT CHARGE 135.67 - 27 = -162.67

• -162.67 - 180 = -342.67

• OVERDRAFT CHARGE -342.67 - 27 = -369.67

• -369.67 - 87.60 = -457.27

Example 4 Cont.

• OVERDRAFT CHARGE -457.27 - 27 = -484.27

• She had 3 overdraft charges

• 27 * 3 = $81 in overdraft charges

Example 5 - Check your Answer

256 - 312 = -56

Overdraft charge -56 - 33 = -89

Transfer from savings -89 + 250 = $161 balance

3.1 Homework

Work on your FA 3.1 Worksheet